What is Exchange-Traded Commodity (ETC)?

An exchange-traded commodity (ETC) is typically backed by an underwritten note that is collateralized by an underlying asset purchased using the capital invested into the ETC. As a result, exchange-traded commodities are often considered a cross between an exchange-traded fund (ETF) and an exchange-traded note (ETN). This means ETCs have some of the potential tax and cost-saving advantages of ETNs, while also providing a degree of risk reduction in the event an underwriter defaults.